I love our financial independence/early retirement blog community like crazy, but there are some things we can all be doing to serve readers better. Some of them are simple, and some aren’t. But we owe it to our readers to be more transparent and to be more in touch with what our readers are up against.
Today we’re continuing the mini-series on Social Security and Medicare by looking at whether or not you should build Social Security into your retirement plan. We’re not counting on it, in part because we don’t need to, but also for some big reasons that are worth considering for everyone who wants a secure financial future. Give it a read and then let us know what you think!
When we first formulated a real early retirement plan, it was based on the rigid belief that we’d never, ever work again. Or at least never *have* to work again. And while that’s still true — we haven’t expedited our plan by forcing ourselves to earn income in the future — we now expect to get a much more diversified set of income streams in early retirement. In part because life happens and we’ve made some different choices along the way. And in part because that recession hasn’t hit yet, health care is still up in the air, and it makes sense to keep hedging against sequence risk and health insurance uncertainty.
Today I’m (finally) sharing something that I’ve wanted to write about for a long time, but haven’t tackled because there is no easy formula: how to determine what is “enough” to save for early retirement. “Enough” is perhaps the centrally important concept to early retirement, but it can feel overwhelming to quantify your own. Here’s a breakdown on how we calculated ours, and how you can do the same for your own circumstances.
Today, a post about the under-recognized benefits of spending less in early retirement, because spending less means earning less, and earning less means a whole bunch of benefits. (Psst: the biggest one is insulation from Obamacare price hikes.) Let’s take a deep dive into the many benefits that come with earning a low income in your early retirement years.
We have said from our second post ever that our vision for early retirement has never included mandatory work. And we’ve been more vigilant about this fact than probably any other in our early retirement plan. We’ve shifted our investments, we’ve changed our timelines, we’ve debated when to give notice, but we’ve never wavered on the no mandatory work idea. But… that might be changing.
There’s an issue that we’ve struggled to get our heads around, which we’ll call our optimal retirement income: a level at which we get a big Obamacare/ACA subsidy on our health insurance, we pay low taxes and we enjoy a comfortable standard of living. But calculating that number is not as straightforward as it seems. Enter the income vs. cashflow discrepancy!
Something we get asked about semi-regularly is our two-tiered retirement plan, and why we aren’t thinking of our taxable and tax-deferred funds as all one pool. Here’s a breakdown of why.
I have a super visceral memory related to taxes that I still carry around with me. My parents divorced when I was in high school. The divorce itself was fine, but what was not fine was watching them get audited post-divorce for a year in which they had been married. It was the worst I ever saw of my parents, but it was also an important lesson in dealing with accountants and the IRS.
we’re here today with a post we’ve been hinting at for a while: the full rundown on why we decided to go against conventional wisdom (and the well-grounded advice of many of you!) to make a personal loan to a family member. we wanted to make sure we had everything squared away before sharing the details, but now that time has come.
we’re just a little over a week away from the end of the year, and now that we know how our bonuses shook out (mine: better than my low expectations. mr. onl’s: better than our fairly high expectations. wohoo!), it’s a good time to look at how we did this year, and look ahead to our goals for 2016.
this week and next are scary weeks for us. these are the weeks when we’ll find out if we’ll be doing a happy dance that we hit our year-end goals, or making sad puppy faces at each other for the next few weeks because we missed the mark. yep, it’s bonus time.
we feel the sunday blues in a big way. and we know why: not only do we just not love having to work every day, we know that we’re in especially high pressure, stressful, occasionally soul-sucking jobs. but we didn’t just default into these golden handcuffs of ours, and we don’t stay in our jobs because we lack imagination. our choice to stay put in unsustainable jobs is a clear-eyed decision we’ve made, based on considering all of our options and deciding what’s most important to us. the most important thing? getting to our exit date as soon as we possibly can.
early retirement is a bfd. and it’s not for everyone. it’s a very different path from the one most people follow for a reason, and it’s not one we should go down without having our eyes wide open. early retirement won’t magically fix everything we wish was different about us or our lives, and it comes with its own set of pitfalls and stresses. to help sort this out, we’ve put together a list: the ten questions you should be able to answer before you retire early.
you know we love a good object lesson. recently we had one inexplicable morning when the fire just would. not. light. those days are a reminder that the definition of insanity is doing the same thing over and over but expecting different results. the answer: add kindling. the point of the kindling is not only to get us past those obstacles, and to get the fire going a little, but to get those flames to start spreading — and spreading fast.
we’ve both come across a seemingly frequent but also puzzling (to us) phenomenon while perusing new blogs. when aspiring early retirees are telling people in their lives about their plans to retire early, they’re getting negative responses. one of which has us utterly befuddled: the assertion that the accumulation of assets required to retire early constitutes pretty much the worst quality we can imagine: greed. here’s our response, in manifesto form.
today we’re sharing the clearest glimpse yet into where we are on our journey toward early retirement in money terms, along with a detailed breakdown of how we plan to fund both our early retirement and our full retirement. we’re talking percentages instead of absolute numbers, but are going into a lot more detail than we ever have before. that’s right: it’s all the charts.
we are as guilty as anyone of upsizing our spending at various times, mainly on restaurants and travel, but are thankful that several key factors have kept us from permanently inflating our lifestyle, namely our anchors, named for the anchoring effect or anchoring bias in psychology.
we’ve been tracking our numbers for years now, and have always set annual goals for ourselves in terms of savings and mortgage paydown. but crazy as it may sound for us to say this, we’ve never defined those goals in terms of strictly what we would contribute. we’ve only defined our goals in terms of total balance. but with only goals about total balances, we now feel like we’re failing in the current market landscape, when the truth is that we’re saving more than ever. here’s how we’re adjusting our goals.
one of our earliest posts on this blog was about how we don’t share our numbers. it’s mostly because, one day not too far off in the distance, we will drop this whole anonymous charade, and we don’t want all the details of our finances attached to our names and faces. in our culture, money comes with meaning and prejudgments. having x amount means you’re supposed to behave a certain way, dress a certain way, spend a certain way. we don’t want those expectations to precede us.
looking at things big picture, we’re astonished at how far we’ve come in a short time, aided in large part by jobs that overpay us. since we bought the house four years ago, our net worth has tripled, and the year-over-year gains are pretty big, owing to us getting serious about saving and about paying off the house quickly, as well as growth in the markets since 2009.
don’t let any of our more philosophical posts fool you — we’re still total nerds, and we love tracking every possible aspect of our early retirement plan as much as the next guy. but, we don’t share our numbers here, which has sometimes made it tough to explain some of our more unique circumstances, like our need for a two-part retirement.
last week we wrote about what we’ll lose when we stop working, which in our case includes a lot of perks. and today we’re sharing the flipside of that. what we most certainly will never ever ever miss about our careers.
this was our sliding doors weekend. you know the concept: you rush into a train station, and just barely catch the train. but then in an alternate reality or parallel universe, you rush for the same train, but the doors close before you can hop on. that triggers a sequence of events that leads you to a completely different future.
Today: our reasons for being optimistic about our vision for early retirement, and for making things work in spite of the inherent risks.
people in the pf world talk a lot about the power of compounding over time, and we want to talk about how this power has been made evident to us most of all: in our incomes.
